It’s no secret that the older we get, the more our bodies break down. Even now, you likely wake up with more aches and pains than you did just a few years ago—and you may wake up with more in just a few more years.
You have insurance for the big injuries. If you break your arm or need surgery, that’s covered by your health plan. But what about later on down the road? What if you need help just to get through the day? What if you need long-term care (LTC)?
When hearing the words “long-term care,” you may have some initial thoughts about its purpose, usefulness and relevance. We’ve noticed there are a lot of common perceptions floating around about LTC that aren’t always true, so to help eliminate any confusion you may have, here’s the truth about some of the most common LTC misconceptions.
Medicare/Medicaid Will Pay for My Long-Term Care
The short, quick answer is that this likely isn’t the case for the vast majority of people. However, it is possible—provided the type of care you need meets a very narrow set of requirements.
Medicare will pay for long-term care only if you require “skilled” services, meaning a short stay in a skilled nursing facility, hospice care, or the costs associated with home health care. Even then, they’ll only cover these costs for a maximum of 100 days. Since the majority of long-term care is non-skilled assistance (helping with eating, moving around, bathing, etc.), it may be safe to assume that Medicare will not cover your long-term care needs. And if you do meet their requirements, once that 100-day window closes, you’re on your own for 100% of the costs incurred.
Additionally, while it’s possible you’ll qualify for Medicaid assistance, this is also unlikely. Medicaid is means-tested, which means your assets have to be depleted to a very low level before the government will step in and help you pay for your LTC bills. This level varies on a state-by-state basis, so you should contact your State Medical Assistance office to see whether you qualify for assistance.
Long-Term Care Insurance Only Covers Nursing Homes
Here’s one that actually works in your favor. LTC and nursing homes have almost become synonymous, but the fact is that nursing homes are just one of the services that LTC insurance covers. In addition to nursing homes, LTC insurance policies typically cover hospice care, respite care, and Alzheimer’s care facilities, among others.
LTC insurance also covers home health care, which is a huge plus. However, whether or not you’re covered depends on something called activities of daily living (ADLs). In health care, there are six basic ADLs:
- Transferring: The ability to get out of a bed or chair and move around on your own
- Toileting: The ability to go to the bathroom on your own
- Bathing: The ability to take a bath or shower on your own
- Dressing: The ability to get dressed on your own
- Eating: The ability to prepare meals, eat them, and clean up after yourself on your own
- Continence: The ability to hold your bowels or your bladder until you can reach a toilet
For your home health care to be covered by LTC insurance, you must need assistance with at least two of the six basic ADLs, and you must be expected to need assistance for at least 90 days. So, if you find yourself in a situation where you need help with things like going to the bathroom, moving around, or bathing, but you’re otherwise in good enough health to live in your own home, then LTC insurance covers the cost of your home health aide.
I Won’t Need Care
No one can say with any certainty whether or not they’ll need LTC. It’s certainly possible that you may not end up needing this type of care, but the odds that you will end up requiring some form of LTC may be significantly higher than you think. In fact, recent studies have shown that 7 out of 10 people will need LTC at some point in their lives, so it’s not something to just brush off lightly.
Additionally, on average, those who need LTC will need it for two years over their lifetimes. With the average cost of a home health aide coming in at over $54,000 per year, if you do end up needing this type of care for two years, that’s over $108,000 that you’ll need to pay out of pocket—and that’s assuming you only need a home health aide. The costs rise significantly if you need to stay in an assisted living facility or nursing home or if you need LTC for more than just two years.
I’m Too Young to Buy Long-Term Care Insurance
In order to avoid paying premiums before making use of the benefits, the temptation is to put off purchasing a policy for as long as possible. This opens you up to the risk of seeing your premiums skyrocket—or worse, becoming unable to get coverage. Just as you wouldn’t be able to purchase homeowner’s insurance if your home was on fire, you won’t be able to purchase LTC insurance if you already need care. If an LTC policy makes sense for you, we recommend buying it while in your 50s or 60s.
I Can Just Use My Retirement Savings to Pay for Long-Term Care
Depending on the type of care you need, LTC services can be very expensive, and there’s no reliable way to estimate just how much you’ll need. It’s not as simple as paying off one hospital bill for medical care for a single health event. Long-term care is ongoing, and your care needs could become more dire as you age. Therefore, there’s no real way to save for LTC expenses, since—beyond LTC insurance—there’s just no good way to plan for it.
You’ve worked hard to blaze a path to your retirement goals. You saved diligently and stuck to a solid financial plan. We believe you should enjoy your retirement income—not be forced to spend it all on LTC.
My Spouse or Adult Children Can Just Take Care of Me
Of course, our loved ones will come to our aid when we need them most, but it’s also important to consider how your needs may infringe on their independence. Caregiving can be time-consuming, emotionally and financially exhausting work. Your daughter may welcome you into her home with open arms, but keep in mind that on top of helping you dress, preparing your meals, picking up your medications and taking you to and from appointments, she has her own list of responsibilities.
She may also have to maintain a career, help clean the house, do laundry, help her kids with homework, etc. And let’s not forget, she also deserves to spend some time indulging her own interests and hobbies. Leveraging LTC services like adult day care may allow you to get care during the day and free up time for your loved ones to enjoy the healthy, fulfilling lifestyle they deserve.
What This All Means for You
We hope that you always remain in good health, but the reality is, our health declines in ways we usually never see coming. No one can see the future, but you can prepare for it by looking into an LTC insurance policy.
Hopefully, this cleared up some questions you had regarding LTC, but you likely have more. That’s where talking to your financial advisor or an LTC specialist can be a valuable resource to help you ensure you’re making the best long-term decision for you and your loved ones.
Series 6 & 63 Securities Registrations,1 Insurance License, CLTC® Pam joined Wealth Enhancement Group in 2011 and seeks to provide every client of the Boland team with an excellent experience. She draws on her extensive knowledge of long-term care insurance to serve as a key member of the Roundtable™ team. When she isn’t working, she loves to spend time with her husband Jake and their three children Lucas, Aubrey and Emma The Boland Financial Advisory team...Read More